The Pension Insurance Corporation finances student housing project in London

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The Pension Insurance Corporation finances student housing project in London

Assured Guaranty Europe (AGE) has announced the successful close of a guaranteed £87 million (US$106 million), 46-year index-linked loan, provided by The Pension Insurance Corporation (PIC) to the University Partnerships Programme (UPP). The guaranteed loan will be used to finance the construction of new student halls of residence for the University of London.

UPP is the main equity sponsor and also is responsible for maintenance, with construction to be carried out by Watkin Jones, a UK developer.

The construction of Duncan House will be located in Stratford, East London, the site of the London 2012 Olympics, and will involve the demolition of existing academic facilities and the construction of a 32 storey tower to house 511 student beds.

The University of London is a federation of 18 colleges with a total full-time student population of approximately 113,000 and includes prestigious institutions such as University College London, the London School of Economics, King’s College London and Queen Mary.

Dominic Nathan, Managing Director of AGE, commented:

“For the university sector, where the concessions have 40-year maturities or more, the use of our AA wrap adds value in two ways. Firstly, it provides very long term debt that is ideal to match the maturity of these types of projects – 46 years in this transaction – and secondly, 100% inflation-linked debt provides highly efficient financing that adds real value to the sponsors. This is Assured Guaranty’s second wrapped transaction for a UK university in recent years (following a wrapped bond for Edinburgh University in 2013), and we are pleased to have what looks to be a promising pipeline going into 2017.”

Nick Proud, Chief Executive Officer of AGE, commented:

"The infrastructure finance market is transforming as a result of the implementation of Solvency II in January 2016. Assured Guaranty is able to provide a highly competitive and cost-effective solution for infrastructure debt because its AA guarantee allows for substantial capital relief under the new Solvency II rules. This is proving very attractive for both institutional investors and sponsors and issuers. We are entering what appear to be the most favourable market conditions for financial guarantees in nearly a decade.”

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